Slide 1© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
CHAPTER TWO
Decision making and problem solving encompass large-scale, opportunity-oriented, strategically focused solutions
Organizations today can no longer use a “cook book” approach to decision making
This chapter focuses on technology to help make decisions, solve problems, and find new innovative opportunities
Decision support systems
Executive information systems
Artificial intelligence (AI)
Business process reengineering
Making Business Decisions
Metrics: Measuring Success
The Future: Artificial Intelligence
SECTION 2.2 – Business Processes
The Future: Business Process Management
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SECTION 2.1
LEARNING OUTCOMES
Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics
Define critical success factors (CSFs) and key performance indicators (KPIs), and explain how managers use them to measure the success of MIS projects
Classify the different operational, managerial, and strategic support systems, and explain how managers can use them to make decisions & gain competitive advantage
Describe artificial intelligence and identify its five main types
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Apply sophisticated analysis techniques
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Structured decisions - Situations where established processes offer potential solutions
OPERATIONAL
Focus: Internal, functional
Decision Types: Structured, recurring, repetitive
MIS Type: Information
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Managerial decision making – Employees evaluate company operations to identify, adapt to, and leverage change
Semistructured decisions – Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision
MANAGERIAL
Focus: Internal, cross-functional
Decision Types: Semistructured, adhoc, reporting
MIS Type: Business Intelligence
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Strategic decision making – Managers develop overall strategies, goals, and objectives
Unstructured decisions – Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice
STRATEGIC
Time Frame: Long term, yearly, multi-year
Decision Types: Unstructured, nonrecurring, one time
MIS Type: Knowledge
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METRICS: MEASURING SUCCESS
Project – A temporary activity a company undertakes to create a unique product, service, or result
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METRICS: MEASURING SUCCESS
Critical success factors (CSFs) – The crucial steps companies make to perform to achieve their goals and objectives and implement strategies
Create high-quality products
Retain competitive advantages
Reduce product costs
Increase customer satisfaction
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METRICS: MEASURING SUCCESS
Key performance indicators (KPIs) – The quantifiable metrics a company uses to evaluate progress toward critical success factors
Turnover rates of employees
Number of product returns
Number of new customers
External KPI
Market share – The portion of the market that a firm captures (external)
Internal KPI
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Efficiency and Effectiveness Metrics
Efficiency MIS metrics – Measure the performance of MIS itself, such as throughput, transaction speed, and system availability
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Ideal operation occurs in the upper right corner
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Benchmark – Baseline values the system seeks to attain
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Model – A simplified representation or abstraction of reality
Models help managers to
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Transaction processing system (TPS) – Basic business system that serves the operational level and assists in making structured decisions
Online transaction processing (OLTP) - Capturing of transaction and event information using technology to process, store, and update
Source document – The original transaction record
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What-if analysis
Sensitivity analysis
Goal-seeking analysis
Optimization analysis
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The structure of a typical organization is similar to a pyramid
Organizational activities occur at different levels of the pyramid
People in the organization have unique information needs and thus require various sets of IT tools (see Figure)
At the lower levels of the pyramid, people perform daily tasks such as processing transactions
Moving up through the organizational pyramid, people (typically managers) deal less with the details (“finer” information) and more with meaningful aggre­gations of information (“coarser” information) that help them make broader decisions for the organization
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Strategic Support Systems
Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization
Granularity
Visualization
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Consolidation
Drill-down
Slice-and-dice
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Artificial intelligence (AI) – Simulates human intelligence such as the ability to reason and learn
Intelligent system – Various commercial applications of artificial intelligence
THE FUTURE:
1. Expert system – Computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
2. Neural Network – Attempts to emulate the way the human brain works
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3. Genetic algorithm – An artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.
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4. Intelligent agent – Special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SECTION 2.2
BUSINESS PROCESSES
LEARNING OUTCOMES
Explain the value of business processes for a company and differentiate between customer-facing and business-facing processes
Demonstrate the value of business process modeling and compare As-Is and To-Be models
Differentiate between business process improvements, streamlining, and reengineering
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EVALUATING BUSINESS PROCESS
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EVALUATING BUSINESS PROCESS
Customer facing process - Results in a product or service that is received by an organization’s external customer
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MODELS: MEASURING PERFORMANCE
Business process modeling (or mapping) - The activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence
Business process model - A graphic description of a process, showing the sequence of process tasks, which is developed for a specific
As-Is process model
To-Be process model
Workflow – Includes the tasks, activities, and responsibilities required to execute each step in a business process
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SUPPORT: CHANGING BUSINESS PROCESSES WITH MIS
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Customers are demanding better products and services
Business process improvement – Attempts to understand and measure the current process and make performance improvements accordingly
Automation – The process of computerizing manual tasks
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Streamlining – Improves business process efficiencies by simplifying or eliminating unnecessary steps
Bottleneck – Occur when resources reach full capacity and cannot handle any additional demands
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IMPROVING STRATEGIC BUSINESS PROCESSES - REENGINEERING
A company can improve the way it travels the road by moving from foot to horse and then horse to car
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BPM
BPM allows business process to be executed more efficiently and measures performance and identifies opportunities for improvement such as:
Bringing processes, people, and information together
Identifying the business processes is relatively easy
Breaking down the barriers between business areas and finding owners for the processes are difficult
Managing business processes within the enterprise and outside the enterprise with suppliers, business partners, and customers
Looking at automation horizontally instead of vertically